The majority of Indians are adamant that gold is a valuable thing to own. That explains why India has overtaken all other major international economies as the world's largest gold consumer.
Indians invest their money in gold, which they acquire over time. Gold is not just used at Indian weddings; it is also given as a present upon childbirth, religious ceremonies, festivals such as Diwali, and other important occasions.
Indian households have a proclivity for amassing gold. As a family heirloom, this is passed down to their children and grandchildren. Most Indians are unwilling to surrender their family's gold holdings because of this emotional connection.
Instead of selling, take a gold loan
Gold loans are a convenient way to get this money, not just for emergencies but for a variety of other reasons.
The nicest thing about gold loans is that the borrower's credit history is ignored, and all that matters is the purity of the gold being promised.
Gold loan market
In India, however, gold loan penetration is still very low. According to figures from the Reserve Bank of India, the country's central bank, the ratio has risen to 2.1 percent in 2021 from 1.9 percent in 2019.
This indicates that roughly 98 percent of India's gold reserves are un-monetized. Even here, 76 percent of the lending business is unregulated, with jewellers, pawn brokers, local moneylenders, and intermediaries making up the majority of the market. While these companies provide assistance, they charge exorbitantly high-interest rates, ranging from 3% to 10% each month.
Gold loans may be able to aid in a variety of ways.
Although traditionally, borrowing against gold has been considered a distress call, this is beginning to change. This is also being considered as a means of fast raising funds.
Purchasing a home
Even after the down payment and the housing loan, which may not be enough to cover the cost of the house, Indians are beginning to seek out gold loans to fill the deficit. People even take out gold loans to cover the costs of registering newly purchased homes and refurbishing a home that was purchased on the secondary market.
In case of medical emergency
People generally use gold loans for medical crises, especially since health insurance coverage among Indians is very low. When an emergency arises, gold loans can be obtained in a couple of hours.
Education
Because they don't have a credit history and can't receive an education loan readily, parents, especially in rural areas or small towns, frequently take out gold loans to pay for their children's education and school or college fees.
Working capital needs
Small firms in need of working capital take out gold loans to bridge cash flow gaps during difficult periods or to fulfil significant orders. Small enterprises, particularly those managed by women, can benefit from gold loans to grow their operations.
Benefits of Gold Loans
Gold loans provide a number of benefits that make them a better option than other sorts of loans, particularly unsecured items like personal loans and credit card debt. A gold loan may be preferable to a small company loan in some instances.
Furthermore, gold loans can be tailored to satisfy the special needs of a specific group of consumers, such as farmers, businesses, and exporters.
There is very little documentation
Gold loans are the most convenient option for people who have no previous credit history because they require very minimal verification. They only require identification documents such as a PAN card and an Aadhaar card.
Flexible repayment options
Gold loans are also simple to repay because lenders allow borrowers to pay them back in a variety of ways, including monthly, bi-monthly, quarterly, semi-annually, or annually.
In addition, unlike most other loans, gold loans include a repayment option in which there is no EMI and just interest payments are required. At the end of the loan term, the principal can be repaid.
Small ticket size
Some lenders will give you a loan for as little as Rs 3,000. People usually borrow an average of Rs 50,000 and pay it back within six months. The majority of borrowers are businessmen, farmers, and women entrepreneurs.
Direct deposit into your bank account
If everything is in order, banks and NBFCs may finish the e-KYC process fast and approve a gold loan in under five minutes. After that, the loan is disbursed within 30 minutes. The funds are transferred to the borrower's bank account via the internet, and repayments can also be made via the internet.
Interest rates and other fees
Gold loans are secured loans that require the collateral of gold jewellery. As a result, gold has lower interest rates than unsecured loans like credit card debt. Furthermore, with additional collateral, interest rates can be reduced.
Furthermore, the majority of lenders charge no or extremely modest application processing fees. Most lenders also offer gold loans with no appraisal fees, foreclosure fees, or pre-payment penalties.
Conclusion
Gold credit can help you for weddings, for purchasing your fantasy home, for health-related crises and for your kids' school expenses on the off chance that you can't give a guarantee or in light of the fact that they don't have a sound financial record
It can likewise give truly necessary working capital that little and medium ventures frequently find intense to get from customary moneylenders like banks and even non-banking finance organisations.
Gold loans from lenders like Ruptok can help customers satisfy short-term financial needs. It has a large branch network throughout the country and offers a fully online approach for gold loan approval.
Furthermore, the gold committed is covered by insurance. So, if you need money right away to get you through a financial emergency, consider a gold loan.
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